IBEW Members Testify Before U.S. Senate Panel: Workers Betrayed, Locked Out of 401(k) Accounts
March 2002 IBEW Journal
Local 125 members Robert Vigil and Donald Eri, longtime workers at Portland General Electric, described how their Enron 401(k) plansloaded with company stockbecame virtually worthless while Enron officers and insiders bailed out by selling $1 billion in shares. Enron bought Oregons Portland General in 1997.
"Little did those of us working hard every day to make the company successful know what was going on at the top of Enron," said Vigil, an electrical machinist working foreman. "We trusted managements glowing reports of strong financial growth and opportunity. Then in October, Enrons house of mirrors came crashing down."
As stocks plummeted, Enron froze employees access to their 401(k) accounts for weeks last fall. Locked out, the workers were prohibited from selling their shares. Their hands tied, workers saw their lifetime retirement savings evaporate. Enron claimed the lockout was due to a long-planned change in 401(k) administrators.
"We were all barred from trading stock during a critical period last fall," Vigil said. "It seems strange to me that as soon as the really bad news came out on Enron, we found ourselves unable to move out of the stock. As the truth about Enron started to come to lightand as the officers at the top cashed outwe, the employees, had no choice but to ride the stock into the ground."
Vigil read a list of some other co-workers who lost vast sums. "Every PGE employee has a story to tell about his or her losses. All of them are tragic and most of them are life changing."
Enron officers deceived employees. Shortly before Enrons public disclosure of huge losses, CEO Ken Lay sent e-mails to employees stating assurances the company was prospering and its stock price would rise.
"It turns out that Enron was really a sham," said IBEW member Eri, a PGE retiree who held Enron stock. "People at the top seriously misrepresented the financial picture and the companys future to those of us who worked to keep the lights on for over 700,000 customers. We took pride in what we did. We worked in all kinds of adverse weather conditions for days at a time without rest to make sure that Oregonians had light and heat when they needed it. And this is how we get paid back. They lied to [us], and to legislators and regulators around the country, painting a picture of an industry that could flourish without government [oversight]," Eri said.
Some 12,000 Enron employees lost an average of $83,300 eacha total estimated loss of $1 billion in 401(k) retirement portfolios. Tragically, many individuals lost far more than the averagesome of the IBEW victims are listed above. Too many had all of their 401(k) assets in company stock. Enrons contributions to workers 401(k) accounts were in company stock, and employees were prohibited from trading the companys contributions until age 50. "Until very recently, even after age 50, we could only trade 25 percent of the companys contributions per year," Vigil added. IBEW members are joining employee class-action lawsuits against Enron.
"This ... is a tragedy for many, including the workers and investors who, it appears to me, have been cheated out of billions of dollars," Senator Dorgan said. Enron "created secret off-the-books partnerships and, in effect, cooked the books under the nose of accountants and investors," Senator Dorgan added. "At a time when executives, board members and other insiders were selling over $1 billion in stock and profiting handsomely, employees and investors were being set up to take a financial beating."
As a worker protection, Senators Barbara Boxer (D-Calif.) and Jon Corzine (D-NJ) have introduced legislation to cap the percentage of employees retirement accounts that can be held in company stock.